Flashback Saturday: Local roads getting screwed over

This post originally appeared in May 2012.

NZTA is funded from petrol tax and road user charges, which obviously comes from cars, trucks, vans and buses using fuel (or travelling kilometres) along our roading network. The theory is that this creates a relatively ‘user pays’ situation, with money raised from road users being spent on projects that benefit road users (including public transport, walking and cycling, which obviously reduce the number of cars that would otherwise be on the road).

There are two types of roads in New Zealand, state highways and local roads. State highways are owned and 100% funded by NZTA – building them, renewing them and maintaining them. Local Roads are owned by local councils (there’s a rather weird legal situation in Auckland where I think the council own the road but Auckland Transport manage it on their behalf) and are funded roughly by way of a 50/50 split between NZTA and council (generally rates) funding. So already we clearly have a situation where roads are subsidised by ratepayers as part of councils’ 50% share in funding their construction, renewal and maintenance. But let’s leave that aside for a minute.

What’s interesting in this situation is that you effectively have Central Government charging (by way of fuel tax and road-user charge) road users for using a piece of infrastructure that’s owned, maintained and renewed by local government. In essence, it’s a somewhat strange situation – an analogy might be that I own a theatre: I built it, I maintain it and I look after it. But people using my theatre actually pay someone else for the privilege: not me. Obviously, the unfairness of the situation is largely resolved by NZTA part-funding local roads – in our analogy giving me back about half of what it costs to renew and maintain my theatre.

A good way of measuring whether local councils are getting their “fair share” of NZTA’s money is to look at the split of actual travel (and therefore technically revenue) which happens on local roads versus state highways and then compare that with the split of spending on local roads and state highways. We already saw that in Auckland the split in travel is approximately two-thirds on the local road network and one-third on the state highway network: If we were to take a fairly strict “user pays” approach to road spending in Auckland, there’d be an argument for roughly a two-thirds/one-third split for local roads and state highways. With public transport largely on the local road network, arguably the split could be even higher.

Where I’m getting with this relates to an amusing document released under the Official Information Act to Green Party transport spokesperson Julie-Anne Genter, which she has passed onto bloggers on this site. It relates to a Ministry of Transport response to Steven Joyce last year, when he was seeking some technical justification for shifting even more money into state highways at the cost of money that would usually go to local councils. You can see this point outlined in the paragraph below: 
Unfortunately for the Minister, the actual figures tell the complete opposite story. We learn that the local road share of travel is increasing (very slightly), but bizarrely we see that the state highways share of expenditure is increasing – a huge mismatch: 
The table clearly highlights that over the past decade there has been an enormous increase in state highways spending and a much slower increase in local road funding, even though the share of VKT between the two has stayed relatively constant. Back in the early years of last decade we can see that there was a reasonably match-up between VKT and expenditure, but since around 2005/2006 that has changed enormously due to the huge ‘spend-up’ on state highways.

In effect, what we see is local councils now pretty much subsidising state highway projects, in particular the big budget items of the Roads of National Significance. Meanwhile the amount of money available for local roading projects is getting squeezed harder and harder, with less spent in the 2011/12 year on local roads than was spent in the 2006/07 year. With the 2012 Government Policy Statement proposing a further big increase to state highway spending, while putting the squeeze on local road spending, it really does become obvious that our local roads are getting screwed over.

P.S. the Ministry (wisely) suggested that such a table not go in the cabinet paper!

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